Rakesh Jhunjhunwala's VIP bet headed for a phase of underperformance?
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NEW DELHI: VIP Industries, the company where Rakesh Jhunjhunwala owns 5 per cent, could not enthuse analysts much with December quarter earnings. Brokerages said aggressive cost cutting is unsustainable and the revenue recovery post-Covid still remains muted.
While the green shoots are visible, analysts believe revenue and margin normalisation for the baggage maker are still five-six quarters away, and the stock may underperform the market after nearly doubling the price from the lows of March, 2020.
What does the management say?
Chairman Dilip Piramal minced no words in accepting that luggage was among the sectors worst-affected by Covid. Piramal told ETNOW that VIP’s sales were only 7 per cent of pre-Covid levels in Q1 and 25 per cent in Q2, which reached 54 per cent in Q3. “The trend is continuing and that is a good sign,” he said.